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Flexdrive brings on-demand weekly car sharing to Philly, South Jersey

Cox Automotive and Holman Enterprises want to offer car subscription services through every dealer in the country.

From one week to months at a time, Flexdrive subscriptions are customized to meet the customer's changing needs.
From one week to months at a time, Flexdrive subscriptions are customized to meet the customer's changing needs.Read moreFlexdrive

Most days, the Nissan Rogue in their South Jersey driveway is "just the right fit" for Lori Reynolds and her family. "But for our coming trip to upstate New York, I'm thinking we'll trade it in for a Chrysler Town and Country minivan, so the kids will have more leg room."

And when hubby Keith next needs to haul video equipment to a field location for his job running the online TV station RadioVision Network, he'll likely swap "whatever we have then for an SUV, like a Nissan Pathfinder."

It's all possible in the brave new world of Flexdrive, a subscription-based, app-driven personal mobility option for drivers like the Reynolds clan.

Newly launched here with a fleet of low mileage, off-lease rides that users can reserve from an app on their smartphone, Flexdrive is steered by two major players in the car world — one of them Atlanta-based Cox Automotive Inc., the force behind Autotrader, Kelley Blue Book, and Manheim, the nation's biggest wholesaler of used cars.

Cox's new 50 percent partner is Holman Enterprises, the Mount Laurel-based automobile conglomerate that operates 38 franchise stores nationwide. Holman runs the huge corporate fleet management company ARI Fleet along with its own parts distribution, consumer finance, and insurance businesses.

"Layer those two entities together, and you can see how we can deliver a unique experience to consumers," said Flexdrive president Jose Puente at a recent launch event at Flexdrive of Cherry Hill, now sharing showroom and lot space with Holman Cadillac.

Cox companies "know where to get the cars, have insights to get the best cars wholesale. Holman is the 16th largest dealer group in the U.S. and owns the fastest-growing fleet management company in the U.S," Puente said. "We already have a network of 70,000 service providers. Ultimately, our dream is to offer Flexdrive through every car dealer in the nation as a new third spoke in their operations wheel, along with car retailing and leasing."

Flexdrive was incubated by Cox in Atlanta four years ago "to offer alternative models of ownership for consumers, understanding that vehicle financing is getting very long and complicated for a lot of people," said Puente. "The average loan today is 68 months and the average payment is about $460 a month. That's difficult for a lot of people, especially for something you only use 4 percent of the time."

With a variety of disruptive factors at play in the car industry and shared economy world, "many alternatives to car ownership are emerging," said Jeremy Paolone, vice president of technology operations for Holman Strategic Ventures. "We have to be planning for different business models in the future."

Young adults saddled with college debt and focused more on experiences than possessions aren't buying cars as their predecessors did, he noted. The average car buyer's age is now 34 to 37 and rising.

Ride-booking, car-sharing, bike-sharing, and improved public transportation services have reduced the need for long-term car commitments. "The days of falling in love with cars and loving to drive may be falling by the wayside with this generation," said Paolone. "They're taking a longer time before getting married, buying a house. Instead, they're traveling the world.

"Car ownership is restrictive. You're tied to this huge expense, while everything else today is by rent or subscription. Subscribing to Flexdrive is very similar to an on-demand service like Netflix. You use it when you want and how you want."

Car dealers are also feeling threatened by the original-equipment manufacturers — the carmakers. It hurts dealers when a manufacturer mismanages production of, say, midsize sedans by making too many. The brand is then forced to clear the lots with huge discounts and crazy lease deals through the makers' own "captive" financing company.

A slap-back effect then hits two or three years later. The used car market is flooded, resale prices drop more quickly than anticipated. Would-be new-car buyers who want to do a trade-in are discouraged to find that their three-year-old car is "under water," or worth less than what's still owed on it. They may walk out of the showroom in a huff or go for a certified pre-owned, concluding that new cars are overpriced and likely to plunge in value.

Flexdrive can help stem that deflation, said Puente, by "taking some of the used-car inventory off the market and working it" until the investment and residual value numbers are equalized. That will also appease the note-holding finance companies and keep them interested in making more car deals.

Pouring more salt on the wounds, manufacturers are now diving into the new "personal mobility" space, investing as GM did in Lyft, financing car leases for Uber drivers, and testing their own short-term rental offerings. All are "shortsighted" strategies "that cut out the dealers," grumbled Paolone.

In both the Pacific Northwest and Brooklyn, you can now get a Mini Cooper, a 3 Series BMW, or an electric BMW i3 by the hour or day for "41 cents a minute" through BMW's ReachNow CarSharing.

GM has launched a variant called Maven in more than a dozen markets, and is testing weekly rentals of all-electric Chevy Bolts in San Diego as Maven Gig.

Audi recently bought an airport car rental-based  business called Silvercar that offers only Audis.

And Zipcar offers cars here for as little as an hour at a time.

Because Flexdrive offers a weekly minimum of clean, low-mileage used cars rather than new cars, executives contend it can undercut the weekly prices of a typical car rental company. Some Flexdrive dealers ask first time subscribers for a $250 refundable deposit, though Holman stores won't, according to Puente.

"You can take a car for as short as a week or as long as you want," Puente said. "There's no contract to sign, no credit check. You must have a clean driving record and a credit card or a bank-issued debit card in your name. If you meet those requirements, you can select the vehicle you like and pick it up" or sometimes have it delivered to you. "The price includes fully stacked car insurance, roadside assistance and all maintenance. An onboard computer tracks and notifies when you need to bring it in for free service." The device can also do remote location and disabling of a vehicle if it's been stolen or the customer doesn't make the weekly payment.

All-inclusive Flexdrive pricing — except for gas —  ranges from $149 a week for a Ford Fiesta up to $279 a week for a sporty, summery, $40,000 Jeep. It "never varies, unlike at a traditional car rental agency where adding full insurance typically doubles the rental fee and the pricing on a busy holiday weekend can be six times more than our everyday charges," noted Puente.

Flexdrive users do need to factor in local sales tax and car rental-specific surcharges — the latter adding $2 a day if you pick the car up in Pennsylvania (Flexdrive of Philadelphia is at Audi Willow Grove). There's a $5-a-day "Homeland Security" surcharge for the first week as a subscriber in New Jersey. Flexdrive also has locations in Turnersville and Princeton.

"We did the math and it worked for us," said early adopter Reynolds. "You can drive up to 500 miles a week without overages, and roll over unused miles if you have it longer than a week. Our previous cars were costing us $250 to $300 a month for insurance, $500 to $1,500 a year or more to maintain with brakes and tires and such. Here we have none of those charges.

"The cars are absolutely spotless, the follow-through is terrific. I got a call one day that Flexdrive was getting an 'error message' from the car and could I bring it in and swap it out. I took the white Nissan Rogue back, now I have a 2016 silver gray Rogue with backup camera, Bluetooth, all the bells and whistles, great mileage, and none of the aggravation."